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Who Are You Talking To?

Manager For A Day, by FTTUBI read a movie review the other day and noticed that in the first few paragraphs there were two words that I didn’t immediately understand.  The words “bifurcated” and “atavistic” were used, presumably to help readers better understand what the reviewer thought of the movie.

Well, those two words are not part of my everyday vocabulary, and upon reflection, I might be able to explain “bifurcated,” though aren’t sure what that has to do with the subject movie.  As to “atavistic,” I think that I’ve heard the word before, but really don’t know what it means.

Now I consider that my intelligence level may be considered a bit above average, so I have to wonder – who the heck was the reviewer talking to with their review?  I certainly didn’t “get it” as far as whatever points they were trying to make.  And NO, I didn’t drop everything to look up those two words.  What I did do was stop reading the review.

Who Are They Talking To?

This is especially important when considering your compensation communications.  If you want someone to hear what you have to say, to understand your message or point of view, to learn from reading your words, you have to talk to them at a level they are comfortable with.  Not you.  This is not about you.  Or at least it shouldn’t be.

There’s a lot of information out there, a problem for our times, some would say.  So if you want to get your message across, you need to be able to reach your target audience with as simple a message as you can.  So they all can understand, so they can repeat it to others, so that they’ll remember it tomorrow.

Is your text written at the New York Times 8th grade level?  If not, why not?  Don’t try to impress your audience.  It doesn’t work.

Losing Your Audience

A similar experience happens when listening to a speaker at a compensation conference, a webinar or even at your local professional association meeting.  The speaker uses a word or phrase that is foreign to you.  What did they say?”  Your mind stops listening as it struggles to identify the strange word and what it means – and then to put it in context.  Maybe you’ll figure it out.  Maybe you won’t.  Meanwhile, though, the speaker has kept on talking – but you haven’t been listening while your mind was paused.  Now you have a struggle to catch up.  Maybe you can.  Maybe you can’t.

Then it happens again.  Another mind pause while you mentally translate, “what was that again?”  And so it goes, and you never quite fully understand the speaker’s message.

That’s not communication.  That’s a speaker talking to a mirror.  You’re incidental.

The Writer’s Club

That’s what I call it, to describe the majority of contributors to professional journals.  For a number of years, I was on the article review committee for one of those magazines, and I often wondered who these authors were writing to.  If perchance they were trying to educate or explain practical tactics that would assist practitioners with their immediate problems, then I’m afraid that many an article wouldn’t pass muster.

That’s because many articles (check it out) are written by academics and consultants, not practitioners who have dirt under their fingernails from working in the trenches.  As a result, practical advice (what can I do now?) is usually in short supply.  What we all too often get instead is conceptual “stuff” from the view at 30,000 feet, broad inspirational white papers that you just know your senior leadership won’t even consider.

This isn’t always the case, of course, but how many of those articles are you able to wade through before your eyes glaze over?   Not just read the words, but learn from?  Heavy stuff.  Heavy lifting.

When someone is communicating, is actually reaching you with their message, you listen, you absorb, you learn.  It’s the same for me.

So talk to me, not to the mirror.

Why Reward Employees?

Boba Fett Reward, by pasukaru76Now you may be asking yourself, why is he talking about this?  Isn’t it rather obvious, like 2 + 2 certainly equals 4?  Doesn’t everyone reward employees for their personal efforts?

Sad to say though is that there really are organizations out there that don’t view the employer-employee relationship in quite the same way as the rest of us.  Their thinking is, “We pay them a salary for doing their job.  Why should we pay more?  Case closed.”

Okkkkk, but taking a page out of an old Compensation 101 textbook let me list the reasons that such a negative attitude about your workforce can become a problem, both short and long-term.

  • You need to pay competitive wages: While this point is seldom argued your comparative marketplace is a moving target.  What looks like competitive today soon won’t be, so unless you have a process for updating your competitiveness those pay rates will start to slip behind.  And that slippage will pick up speed over time.
  • Business costs rise over time; so do costs for your employees: The price of most items is higher today that it was a year ago.  If your employee costs (pay levels) are fixed/frozen your employees will have an increasingly difficult time making ends meet.
  • Behavior rewarded is repeated: It’s an old saying but is worth repeating until everyone “gets it.” If you reward desired behavior (good performance) you’ll likely get more of it.  Conversely, the lack of reward tends to encourage average behavior, or worse.
  • Do you want a high-performance culture?: If you fail to provide employees with equitable and competitive pay that’s linked to their job performance, what you’ll get instead is a lot of Joe Average performance.  Because an employee’s personal self-motivation (they’ll work hard anyway) is not sustainable.  That personal battery of enthusiasm will drain down and shut off.
  • Employee expectations: Yes, they expect to be paid a reasonable base salary for their work, but they also expect to be both acknowledged and rewarded (pay increases) for making a continuous effort on the company’s behalf. No one will work well for very long with their pay frozen or the likelihood of more money being a “maybe” or a “we’ll see.”
  • An elemental cost of doing business: This may be hard for some to understand, but if you’re going to operate a business there are certain costs that need to be incurred. Otherwise, don’t bother.  And one of those costs is to properly pay the people who are working for you.  They keep the business going, and you should never forget that.
  • Honoring your commitment: Do you proudly tell everyone who will listen that you’re a “pay-for-performance” company?  Do you believe that employees drive business success?  Well then, you had better walk the talk.  Because employee trust is at stake, and failure to hold up your promises will ensure business mediocrity, if not a slow descent into failure.
  • You should fear the alternative: If you decide to march to the beat of a different drummer, to say “nahhh” to the above, then consider what your future likely holds in store for you. Because when employees start to say, “why bother?” you’re in trouble.
  • Dissatisfaction with management: This is both negative and infectious. Disgruntled people are not quiet people.
  • Reduced morale: Sad faces and blank looks are not signs of an engaged workforce.  Talk around the break room will lean toward other “opportunities.”
  • Reduced productivity: Employees take their foot off the gas pedal.  What you get from them starts to drop off from a desired 110% effort to somewhere south of 100%.
  • A higher degree of disengagement: When your employees start to mutter, “I don’t care” – that attitude will spread, either slow or fast.  What it builds is a low performing culture.  Think of your business as a car driving around town with the brakes on.
  • Increased turnover (leavers) – of the wrong sort: better performers, who always have an option in the marketplace. Someone else will tell them, “We love you.  We’ll take care of you.  Come work for us.”

If you believe that employees are important to the success of your organization, then not having a proper pay-for-performance program in place to recognize and reward job performance on a regular basis is a mistake of the highest caliber.

Then again, perhaps some believe that employees are an easily replaceable commodity, that their pay is a cost worth trying to reduce, rather than an investment.  Employees are not people, but simply cells within a spreadsheet, or blocks on an organization chart.

Just remember that what you sow is what you’ll reap.

Compensation Managers Need To Manage

Manager For A Day, by FTTUBHaving technical smarts isn’t enough to manage either the staff or the function.

I once supervised a strong performing technical analyst who was eager to work his way into compensation management.  This fellow was a whiz at spreadsheets, data analysis, and survey modeling.  When you needed a number you knew who to ask.

However, he was not good at explaining compensation and experienced difficulty with personal interactions when dealing with contentious issues involving either individual employees or internal clients (management).  Relying primarily on his technical background he was all black-and-white numbers with those he dealt with, even when the landscape turned grey and the client needed new thinking.

The career challenge he faced was being able to morph from an objective in-the-trenches technical analyst into a broader, more visionary role (subjective) that required comfortably dealing with the “big picture.”

Job Growth

A long time ago, when I was a Compensation Analyst, I worked on a lot of spreadsheets and job evaluations.  Then, when I became a Compensation Manager I handled fewer spreadsheets and fewer job evaluations.  Someone else helped.  When I became a Director of Compensation one of my subordinates was assigned to the spreadsheets and job evaluations.  I remained accountable but was able to assign the responsibility elsewhere.

Thus the higher I rose the broader my vision of compensation needed to become, moving from looking straight down my nose at the desk in front of me to over the employee’s heads and onto the horizon and beyond.  Which meant that, as I dealt less with compensation details on a day-to-day basis, the required tools and competencies of my role changed.  I became part of management.

Managing Compensation usually consists of two levels, first one and then the other:

  • Manage the staff: You have subordinate employees whom you are responsible to lead.  This means hiring, firing, assessing performance, making staff pay decisions, assigning work, training and developing and in general making sure that your employees get their work done in a proper fashion (done right and on time).  Your manager should be measuring you at least as much as a manager of employees as for the individual contributor you used to be.
  • Manage the function: In addition to the above, here your responsibility is to lead the compensation function; to take control of the company’s reward programs and either administrate them or convert them to better support business objectives.  Here lies the responsibility for vision, persuasiveness and higher-level personal interface.

If your role is administrative in nature, simply to keep the ship afloat, you can manage the staff without having to manage the function.  On the other hand, I’ve seen bad managers who were good at the vision part, but hopeless when it came to people skills (their staff).

The harder task is to lead, to have the vision and the confidence to drive the function forward.  It means taking reasonable risks, being able to defend and justify your recommendations and being able to influence senior leadership to move in the general direction you espouse.

And by the way, having great technical skills in no way guarantees that you’ll have similar success with management skills.  Workplaces are littered with the false dreams of those unable to adapt to a new set of necessary competencies.

I, Manager

The point is, that whichever role you find yourself in, being an effective manager requires that you focus on the people side – your employees and your clients.  It means that, to a large extent, you need to separate yourself from those technical tasks that you personally performed earlier in your career.  You should delegate detail work to subordinates while you deal with the broader issues and more direct interfaces with clients and management.

It will entail you learning a whole new set of skills – management skills.

But some folks don’t like to leave their spreadsheets and survey analyses behind.  These are those who fail to fully embrace their management responsibilities, but continue to play an individual contributor role – as if their title remained an Analyst, not a Manager or even a Director.

The Bits would ruefully shake their heads; poor form, poor form.

I Don’t Remember That

This is a wallpaper of a sleeping cat

This is a wallpaper of a sleeping cat

Have you ever found yourself in a situation where someone (usually your boss or a higher-up) makes an announcement or a decision using draft or preliminary figures that you had given them some time ago?  Only today the correct figures are different from what you presented as a draft.  Then when you ask why the “old” numbers were used, the finger points back at you.

Awkward, isn’t it?

Suddenly you’re on the defensive and your credibility challenged because of an earlier estimate or cautionary advice that perhaps you didn’t want to give out in the first place.

You want to scream at the offending party, “don’t you remember that I told you that the figures weren’t final?”  That your analysis was incomplete at the time, that further checking was required, or that you gave your best estimate based only on preliminary data?

But you are the author of those figures, no matter how wrong they are today.  So why are they still in play?

Selective Memory

It often turns out that all that was remembered by the fellow with the frown on his face was that particular damning figure, and all the buzzing in their ears about qualifier terms and conditions that preceded and followed it has been forgotten.  To your chagrin you may now be viewed as someone who either; 1) gave incorrect information, or 2) subsequently changed your mind without telling anyone.

Unfortunately, you can’t say what you’re thinking.  That wouldn’t be a good career move.  The only card you have to play reads “damage control.”  Roll out those qualifiers again.

Earlier in my career, when I was responsible for job evaluation, I would steadfastly refuse to offer a preliminary evaluation, having been burnt by the same scenario as above.  I found that, if the managers liked what they heard, that’s all that they would hear.  Because if, lord forbid the final analysis differed from the preliminary estimate you’d be hauled up before the Inquisition to explain why you changed your mind.

“I already told the employee,” is a phrase I’ve heard more than once – before I learned to keep my mouth shut.

So be careful when you give a number to management before you’re confident enough to defend it.  For their own purposes they’ll grab what you give and lock it down with their fixated, but flawed memory, while at the same time forgetting any qualifier terms or cautions you might have provided.

It’s human nature to remember what you want to hear, or what you can accept.  So that preliminary figure you surrounded with qualifiers?  Chances are management was OK with the number, or at least could deal with it, and so off they ran to integrate your analysis into their plans.

“I Don’t Remember You Saying That”

In their forgetfulness, they might even grow irritated with you, for all the plans they made with “draft” or “preliminary” data (shame on them).  These folks suddenly act like you changed your mind, or gave them wrong information.  All your previous explanations and qualifier comments are lost.

Management memories can be quite selective, and they would be very reluctant to admit an error on their part, never mind deal with the consequences that their actions created.  But as they are higher up than you on the food chain, discretion in verbal and written thought still remains your best response.

What Can You Do?

This is a situation where your options are limited, because; a) you’re likely dealing with your boss or higher, and any critique of their behavior needs be carried out very carefully, and b) when you’re asked for a number you generally have to give one.  Begging off is usually not an option.

So remember a tactic once described to me by a Training colleague:  you have to tell them, then tell them again, then remind them of what you told them.  So if caught up in a “give me a number” quandary, you need to emphasize whatever qualifiers might later modify the figure(s) being discussed.  Then you have to repeat your concerns again before closing.

Finally, put the worrisome figures in writing, nicely wrapped together with whatever concerns you have about its validity.  Cover yourself.

Will it work?  Will it save you from another awkward moment?   Perhaps.

Life isn’t fair, is it?  So no, even this strategy will fail from time to time.  But at least you’ll have positioned yourself to present an effective response.

Just remember to be polite about it.

Dotting The “I” And Crossing The “T”

Employee, per Southern Methodist U.In order to manage reward programs effectively, compensation practitioners and senior management need to understand how externally competitive those programs are.  In making that determination, though, just how precise does the analysis have to be?  To what lengths should one go to increase the level of exactitude in the analysis, and is that effort worthwhile?  Does the effort to squeeze out greater precision bring meaningful results?

In other words, what’s the additional value of dotting the “I’s” and crossing the “T’s”?

As compensation professionals will tell you, the competitive “marketplace” for reward program surveys is an imprecise animal, subject to numerous variations and interpretations.

  • One survey doesn’t use the same companies as the next survey.
  • The ability to match job descriptions varies from precise to broadly similar roles
  • Surveys provide different mixes of industries, geographies, and revenue
  • The use of weighted average/Average/ Median/ 50th percentile formats isn’t standardized
  • International surveys often fail to provide enough information

In addition, the market is a moving target as population changes, organizations shift and employee pay fluctuates.  This means that you’ll need to be careful of “aging” factors, such as adjusting data from date of collection to the current or some future date.   My practice is to “round” to the nearest 100 units of annual currency.  Is that distorting data?

Pick A Figure?

Do you think that a market rate of $47,570 for a particular job is an accurate reflection of current trends, or simply an arithmetic average of data that looks precise?  Would you fall on your sword over that figure?

Using three different surveys would likely provide three separate figures.  Let’s say your sources report $45,723, $47,612 and $49,375.  If cost, time and effort are not factors to consider, then you could keep going, searching for that common denominator.  Purchase another survey source.  Double and triple check your job matches.  But do you think that the extra source, the extra time/effort will substantially change your initial analysis, or are you simply looking to protect yourself?   Repetition is sometimes just that, more of the same with little-increased value.

Are you playing a defensive game to divert potential criticism?

For most of us, a quick and straightforward analysis suggests that approximately $47,500 is good enough.

And what degree of precision are you being asked to provide?  Are your instructions to feel the pulse of the marketplace,  to get a sense of what is being paid out there?  Or do you need a more precise result?  Is your audience demanding more?

Is The Market A Number?

What is that market?  Anything within +5% to -5% of a “market rate” figure is close enough for me.  Others believe that variable should be 10%, but in my view that leaves too wide a range that could distort your intent to provide the so-called “going rate” trend.

Caution:  You can find any number of analysis paralysis jockeys out there who advocate increasingly precise techniques to zero in on what they call your true market rate.  Just remember that many vendors have built a business around encouraging organizations to slice and dice whatever information is available, trying to define and refine exactly what a “market” is paying, what jobs are exact matches and after a fashion what numbers you can rely on.

Part of their marketing strategy is to use custom designed evaluation techniques and proprietary job matching systems.  Such a strategy effectively marries the organization to the vendor, as one often can’t use proprietary language and techniques (the system) with other survey providers – without the risk of apples vs. oranges.

The Leadership Perspective

From a senior leadership perspective, do you need that depth of precision to make a business decision?

I think you don’t.

There’s a place for precision, and a place for trends – for a “feel of the pulse.”  Usually, senior management wants to gauge the big picture – the overall strategy and its implementation status – letting professional specialists deal with the tactical details.

Have a care in your efforts to be precise, because when you give senior management too many details they tend to dive in almost as a defense mechanism as if they are expected to ask questions. Where they might otherwise have nodded their heads at key points in your presentation, you can instead find yourself immersed in detailed analytics that can bog down the decision-making process.

Management wants your professional judgment.  They don’t want you to defer opinions to what a survey says.  Use survey data as a backup.  Don’t feel you always need to lead with it.

Standing back and pointing at figures is like leading with your chin in a fight.

You won’t like the results.

The Few And The Brave

Different Is Beautiful, by epicnomWhen it comes to the design of performance management programs most companies play it safe.  Right smack in the middle of their assessment scale is the word “average”; or perhaps they use “meets expectations,” or “satisfactory” or the like.  Each term signals the same assessment, though – middle of the road.  And isn’t that where managers expect most employee to fall?  After all, the height of a distribution curve peaks at “average.”

Surveys show that over 80% of organizations using a rating scale to assess employee performance have chosen either a three, five (most popular) or seven scale system.  The common denominator of each is a middle rating category, the average.

But what if you chose not to have a middle rating in your performance review process?  What if you told managers that they couldn’t call anyone “average;” that employees would have to be designated as either better or less than that?

No Can Do

Which is exactly what you’ll hear.  Many managers will balk at having to choose between rating someone as either what they consider an under or over performer.  That’s the way they’ll see the decision-making process – as forcing them to select what is for them an incorrect rating.  Because they think the majority of employee performance falls between those ratings.  Because they think most folks are average, doing the job that they were hired to perform.  And “average” is a safe word.

Other organizations have decided that they want their performance review process to couple development dialogue into the conversation and encourage employees going forward.  These feel that in order to achieve that goal they need to better describe how their employees have been performing.  Which means that they take away the middle ground.

Perhaps there’s a different way to look at the rating process, a less “easy button” approach that doesn’t provide a default selection for the manager.  Perhaps there’s a tactic that might help drive employee performance – instead of simply reacting to it.

What if the performance review process asked a different question?  Instead of assessing how an employee’s performance compared to a common-man average, what if the question became whether the employee was “successful” in their job?

Successful

Here’s a word that implies achievement, the gaining of favorable results.  Compare that against what the dictionary would describe as common, ordinary, typical – the average.  An argument can be made that an “average” employee is not necessarily a successful one and that a successful employee is a better performer than an average one.  For the good of your business, I’d suggest that you’d want to encourage more successful employees than average ones.

A common management view of “average” employees is that “we’re not going to get where we want to go with this group.”  The desired goal of a high performing organization will not be achieved on a foundation of common, ordinary and typical employees.

Needs Improvement

What if, instead of saying an employee’s performance was below average (usually seen as just below the middle ground) you viewed effort more positive, saying that the employee was “on track” though not quite yet successful?  This can be a different, less negative perspective.  If you want your performance review process to help drive performance, then encouraging employees (“you’re almost there, keep it up”) is a better strategy than negativism.  And if you believe that performance recognized is performance repeated, then you want to make sure you focus on a glass that’s half-full, not half-empty.

Taking A Risk

Designing a performance review process without a middle rating for your performance scale is taking a risk, which is no doubt why most companies steer clear.

  • Too many employees could be ranked “successful,” merely to avoid the negative connotation of “needs improvement.”
  • Over-rated employees might be given the wrong message, inflating their perception of a performance that doesn’t deliver the same effort to the organization.
  • The bottom two (of four) rating categories would see little use as “Needs Improvement” retains its strong negative connotation.
  • The organization wouldn’t have sufficient merit increase monies to reward the great majority of employees rated “successful”  – thus leaving little room (or motivation) for lower ratings.

Such an environment could weaken your performance review process to the point of being ineffective – almost pointless.  Those rated less than “successful” would likely fall below 10% – 20% of your workforce – which for most organizations is not a true reflection of performance.

Many of the ratings might even become reluctant manager “gifts” meant not so much to recognize performance but rather to avoid facing uncomfortable conversations with disappointed employees.

This is where management training, coupled with a careful and continuous monitoring of the performance review process, would be key to success.  When you don’t provide a default “easy button” you need to make sure that the decision-makers not only understand the rationale of the four-scale rating system but follow it.

So kudos to those with a four scale performance rating system.  They’re trying to walk the talk of performance management and pay-for-performance.  I wish them luck.

Do We Need A Pay Structure?

6273248505_43d0b56424_oOnce an organization reaches a certain employee population it’s been typical practice for the Human Resources department to replace their ad hoc compensation/reward processes with a more structured program.  A key element of that program development is the establishment of a base salary (pay) structure.  Here you will have an ascending hierarchy of grade level designations (your position is a grade “x,” mine is a grade “y”, etc), coupled with ranges that indicate a minimum-to-maximum value (pay) for each grade.

While distinctions in design can vary amongst organizations the central point of having a uniform structure is very much commonplace in both for-profit and non-profit organizations.

You probably see the “but” coming, don’t you?

Startups And Small Businesses

Just the other day one of my clients, a young and fast-growing high-tech company, explained to me that they didn’t use grades or salary ranges.  They didn’t have a pay structure.  They felt that they didn’t have the time to develop a standardized reward program. “We’re moving too fast,” the CHRO told me, and “We don’t have the time, people or money to focus on an HR project.”

That’s a common response for start-ups and small businesses.  The feeling is that there aren’t yet enough employees to start building an HR infrastructure.  Everyone knows everyone else’s first name and the company Christmas Party could be held at a restaurant.  Also, business leaders are too engaged in more important endeavors: getting the business off the ground, developing products and services and setting up mechanisms to sell their offerings.

Therefore these first generation employees are usually paid on the basis of:

  • Whatever the individual employee could negotiate
  • Whatever the company felt it would take to get chosen candidates to join, or
  • Setting of fixed rates for everyone in a particular job

Little thought is given to pay relationships (equity) or even the short-term impact on payroll expense.  The focus is lock set on creating a business, of getting the ball rolling.  Even job titles become an afterthought, with resultant title inflation slowly infecting the organization, and almost no one has a job description.

I get that.  That’s the reality of getting a business off the ground.  HR takes a back seat.

But it can’t last.

Paying The Piper

Eventually, these poor compensation practices will start to cause real pain within the organization, similar to how too much sugar inevitably causes tooth cavities in children.  Payroll gets out of hand (too high), inequity amidst the staff starts to cause employee relations issues and managers begin to see valued employees becoming disgruntled and heading for the exit.

By the time management starts to realize they have a problem, not only have the problems grown serious and disruptive, but those pay practices that no one cared about earlier have now become ingrained in the small company’s culture. Now it’s not going to be so easy to change course.  Now management risks angering some employees even as they try to steer the ship away from the reefs.  Some of those employees could be valued contributors.

For example:

  • Disconnecting inappropriate job titles is sometimes easier said than done.  Employee egos and self-identification have been blown out of proportion, but to make someone take a step back is difficult.
  • Dealing with outliers who either pop out the top of a salary range or fail to meet the minimum level.  When faced with a competitive pay structure to replace the ad hoc and laissez faire suddenly some employees are found to be overpaid, while others are underpaid.
  • Facing the cost implications of the above.  Raising someone to the minimum value of a pay range is an easy decision, but what if many employees are affected?  And if an employee has been with you for awhile, raising them to the minimum can still be perceived as a slap in the face.
  • Setting grade assignments that reconcile a job evaluation system, competitive market pricing results, and internal equity.  Think of a juggling act where everyone is a potential critic.

So do yourself a favor.  Pay attention to germinating pay issues even as the business passes through its stage 1 and stage 2 development.  Then, when it’s time to standardize and structure your reward programs you will find the road ahead all the smoother for your efforts.

Stubborn Is As Stubborn Does

OLYMPUS DIGITAL CAMERA

OLYMPUS DIGITAL CAMERA

I share my house with five cats (a clowder, it’s called) and it’s been that way for as long as I can remember.  One or two fur balls has never been enough for us.  I love them, they are part of my family, but I recognize that they are stubborn, stubborn, stubborn creatures, and at times it seems like they’re the ones who run the place.

Have you ever tried to change the brand of a cat’s food, or what goes into their litter box, or even their water dish?  They don’t react well to the new and different, and when they don’t react well their loud voices and sometimes unpleasant behavior can really disrupt your day.

These felines are creatures of habit, preferring a daily pattern of repeated behavior that in their view creates a safe and reassuring environment – where they feel the most comfortable.  Break that pattern and you get the look, or worse.  I can attest to the fact that dealing with the stubborn and the habitual can be a real trial.

In the business world, many companies are populated by managers who possess similar inflexible behavior, an aversion to breaks in pattern.  Those who like things left just the way they are.  Whoever coined the phrase “if it ain’t broke, don’t fix it” was probably a charter member in that “blinders on, head in the sand” leadership cadre who likes the comfort of repetitive action.

While it’s a truism that continuing to use yesterday’s strategy and operating principles is rarely a recipe for future success, how often do you see managers hang on to what used to work – until the signs of failure become so visible and so painful that they can no longer be accepted?

Comfort

These folks with their heads in the sand are not necessarily bad managers or even poor business leaders.  What they are is comfortable, and when we’re comfortable we feel safe, relaxed in our surroundings, familiar with what needs to get done and perhaps a bit over confident about our control of the work environment.

When we feel comfortable and confident we prefer to repeat those same actions that brought us to our present state of mental ease.  In other words, we don’t like to rock the boat, we don’t like what we consider “change for the sake of change,” and we’re skeptical of new and unproven techniques.  We get stubborn and dig in our heels.

“It’s worked before, it brought us success.  Let’s leave it alone.”

However, when someone or some event breaks that comfort level (new competition, weakened economy, technological advances, etc.), the first thing we experience is anger that our warm cocoon could be shattered by new business realities.  Soon enough though, that anger will convert to a sense of fear, whether we admit it or not.  More than likely we’ll act out in an aggressive fashion that disguises the panic we’re feeling.

Fear

People can be fearful of change, especially leaders.  Because they don’t know the new rules, because there are risks when implementing new strategies, and those who stick their head above the crowd can get it chopped off.  We’ve all seen that happen.

When you must get yourself up and out of your comfort zone it’s a natural reaction to feel defensive and unsure about what you should do next.  A relaxed and comfortable leadership may not have the competencies or the experience to adapt to new business challenges.  Because it’s not difficult to lead when things are going well.  But when the going gets rough, when the pressure is on to change course, to implement new strategies, not so much.

“I’m not sure about what to do; everything has changed.”

Pushed from their safe environment management can find itself unsure, defensive and unsettled about the correct way forward.  And until matters settle down again they can be difficult for us practitioners to work with.

You Can Help Them 

You may consider managers stuck in the past as living dinosaurs, but have a care because these beasts have teeth.  Because they don’t like this uncomfortable new world some will tend to shoot the messenger.  In order to offer assistance to a leadership challenged by the unfamiliar, practitioners need to step up and provide steady, confident and reliable advice.

  • Acknowledge the past:  Yes, previous strategies have worked well and brought the company success and financial strength, reputation and a strong foundation for the future.  You should acknowledge a well-deserved pat on the shoulders for management.
  • Focus on the why:  Whenever advocating change, focus your message, your research, your examples and your entire business case on why your recommendations lead to solutions.  Keep your eye on the goal, not the changing patterns of behavior.
  • Dangle the carrot:  Always point toward the business and personal success that would be the result of implementing your recommendations.  Besides highlighting the achievement of business success, emphasize that leadership will gain credit for managing the organization through these difficult times.  Stroking the ego doesn’t hurt here.

The next time someone comes to you with an idea to build a better mousetrap, listen to them.  Keep your eyes, your mind and your options open.  Maybe there’s something useful here.  Instead of being afraid of change, embrace the possibilities presented.  New thinking that takes in the new realities surrounding you can make for a better tomorrow.  Perhaps you’ll even shake off that tag of “stubborn.”

We Don’t Pay For Performance

White stone among black, by CyronIn a recent article of mine,  “Do You Really Pay For Performance?”  I suggested several methods for organizations wishing to improve their Pay-For-Performance (P4P) program.  On the other side of the coin, however, there are those out there who prefer to turn away from the matter entirely.  Some organizations do not wish to pay for performance at all and are frankly open about it.

While there seems to be an increasing dialogue about this strategy lately, and several recent articles have highlighted such outside-the-box thinking, current surveys suggest that only around 10% of organizations self-identify with going in a different direction for rewarding their employees.  And of course, when you march to the beat of a different drum you’re going to get a lot of attention, either positive or negative.  Thus the hot bed issue of late.

Marching To A Different Beat

Why does an organization argue against rewarding employees for their job performance?  At first blush, it seems counterintuitive not to acknowledge how an employee performs as a helpful if not critical criteria for judging (and rewarding) that performance.

But for some, there are very real reasons for taking a different tack.

Below is a list of reasons that I’ve heard from clients of mine who have either gone down this road or given it serious thought.  Maybe you’ve heard some of these yourself.  Maybe you’ve heard other reasons.

  • Trust:  Employees don’t trust their managers to properly rate employee performance.  This is a frequently heard complaint, even from those possessing a successful P4P program.  The core of this comes down to the individual level (one’s own boss) and the amount of training provided to those in authority.  However, when an organization feels that they need to step away from P4P for this reason, some serious self-analysis of management practices is in order.
  • Everyone is great: The saying goes, all of our employees are already performing at high levels, so how can we differentiate?  However, this rationale ignores the premise that standards of expected performance should rise even within successful groups.  Even within high performing groups, some employees are better than others.
  • One size fits all: An organization may implement a general increase where everyone gets the same pay increase.  When you can’t or won’t set a policy aimed at differentiating among employees a simple alternative is to give everyone the same increase, regardless.
  • Employees said so:  What I heard was that the employees had told management that they didn’t want P4P.  If the majority of employees are doing an average/successful/satisfactory job, wouldn’t that group be advocates for a general increase?  More so the less than successful, but less so the high achievers.  Another question is whether you should change such an important policy on the basis of an internal survey.  Unless management doesn’t care, either way.
  • EASY button: Easy to administer.  It’s hard to argue that simple processes are the easiest to communicate, implement and defend against criticism.  And P4P programs by their nature differentiate between employees, where losers complain and winners tend to be silent.
  • Universal equity: Everybody knows how they’ll be treated. Pick a common phrase; “We’re all XYZ employees,” “Everyone puts their shoes on the same way,” or “We believe that teams, not individuals, deliver success for our organization.”  The sentiment here is that the practice of differentiating between how employees are treated, especially in a [supposed] subjective manner, is inherently bad for the organization.
  • Rewards for other reasons:  Absent a P4P program organizations also use length of service tenure (LOS) and cost of living (vs. cost of labor) as so-called transparent reasons to grant pay increases.  The price of a loaf of bread went up, thus your pay should as well.  You’ve been here a long time (and we haven’t fired you), so you must be worth more money.  It’s time.

Is This For You?

Maybe.  Perhaps your organization has problems (above) similar to those who decided to walk away from P4P programs.  Maybe your management or HR is not concerned about encouraging good employee performance.

Personally, I don’t agree with taking what I consider a drastic and unreasonable approach to rewards, and I don’t think it solves the problem, but it’s an issue that every organization grapples with, at one time or another.  And there is usually more than one answer to most questions.

In my view having and maintaining an effective P4P program is hard work.  It’s also work that you can’t ignore or walk away from as “Done!”  You have to keep at it.

Or perhaps you can take the easy way out.

But first ask yourself; how would you like your own situation to be handled?

Do You Really Pay For Performance?

Candy reward, by Enokson's PhotostreamTo answer this question most companies would say that, yes – they have a pay-for-performance (PFP) program.  Such a statement is chic, politically correct and offers a positive message about how the company values its employees.  What’s to argue with?  Paying employees on the basis of what they have contributed to the company makes sense, doesn’t?  If they give more they receive more.

On the other hand, a negative response is to suggest that you’re not being fair to your employees, that your idea of a proper reward is to bypass individual performance in favor of treating everyone the same, regardless of contribution.  However, as that acknowledgment would paint you as an employer who is insensitive to variations of employee effort and achievement, it’s more likely that you’ll fall in line and say “yes, of course, we pay our employees for their performance.”

But Do They?  Do You?

There’s an entrenched viewpoint by many in management that granting “merit” pay increases means that their company provides pay for performance.  However, if most employees receive some form of pay increase (90%+), is there really a meaningful distinction being made between high performers and those who merely occupied a chair for the past 12 months?  Isn’t such a practice (if we haven’t fired you, then you’ll get an increase) more like a modified attendance award?

If you’re serious about it, your decision to adopt an effective pay-for-performance strategy should include two critical elements:

  • The decision not to pay if the employee hasn’t performed
  • The decision to make it worthwhile for an employee to be a high performer

One of the common pay practices that continue to hamper the effectiveness of PFP plans is the misuse of the annual merit pay pool through inflated performance evaluations and automatic increases.   Continued use of this practice will increase your fixed costs, but in a manner that won’t effectively reward employee performance or encourage extra effort.

Making PFP work for your company will require hard decisions from line managers who are otherwise accustomed to maintaining employee morale through the avoidance of objective performance reviews.  We have seen that, while there is a shift toward greater rewarding of individual effort, additional monies are not being provided as a result of that shift.  Merit budgets will not increase to accommodate “feel good” increases.  So in order to more effectively use available salary increase dollars companies need to reward their high performers with money effectively taken away from (not granted to) those performing at lower levels.  You can call this, “taking from Peter (average) to pay Paul (higher performer).”

This may also mean that many average performers, the bulwark of most companies, will receive less than they might otherwise have expected from past experience (which is at least an average raise).  What it comes down to is a company’s ability to afford proper rewards for their higher achieving employees (thus motivating and retaining them in the process) by reducing or eliminating rewards to those deemed as underperforming or going through the motions.

The risk exposure is that if managers, through the utilization of performance management programs, don’t properly identify and restrict awards for less deserving employees, the PFP budget will not have enough funds to afford appropriate rewards for high performers.  So you should ask yourself, who is it you would rather disappoint?  Who has less impact on your business and whose loss would be less disruptive to your operations?

While published reports clearly indicate a trend away from one-size-fits-all reward systems, one should look below the surface to learn whether employee performance is being appropriately measured and rewarded.  That distinction is the true measure of PFP.

Getting Serious

To effectively use a pay-for-performance system a company should:

  • Educate employees as to what performance will be rewarded.  This requires measurements, and performance objectives that align vertically in the organization (employee goals relate to supervision, whose own goals relate to management, and on upward to corporate goals).
  • Provide a well-defined rating scale that helps managers distinguish between levels of performance.  Be careful of the word, “average,” as many managers use that as a default rating.
  • Provide a clear distinction of reward between those who have delivered and those who have not.  An employee who doesn’t see much gain from working hard all year (2%+ differential) is less likely to repeat their performance the following year.  For an extra 1%, would you?

So the next time you are asked whether your company rewards employees for their performance, perhaps your answer might not differ, but now you recognize the distinction being made by your employees.   It’s up to you whether to be satisfied with your answer.